Advertisement
Is Concho Resources Inc. (NYSE:CXO) Overpaying Its CEO?
In 2006, Tim Leach was appointed CEO of Concho Resources Inc. (NYSE:CXO). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Concho Resources
How Does Tim Leach's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Concho Resources Inc. has a market cap of US$11b, and reported total annual CEO compensation of US$13m for the year to December 2019. That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Concho Resources. On a sector level, around 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that Concho Resources allocates a smaller portion of compensation to salary in comparison to the broader industry.
So Tim Leach receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see, below, how CEO compensation at Concho Resources has changed over time.
Is Concho Resources Inc. Growing?
On average over the last three years, Concho Resources Inc. has shrunk earnings per share by 83% each year (measured with a line of best fit). It achieved revenue growth of 2.7% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Concho Resources Inc. Been A Good Investment?
Given the total loss of 50% over three years, many shareholders in Concho Resources Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Tim Leach is paid around what is normal for the leaders of larger companies.
Returns have been disappointing and the company is not growing its earnings per share. Suffice it to say, we don't think the CEO is underpaid! On another note, we've spotted 1 warning sign for Concho Resources that investors should look into moving forward.
If you want to buy a stock that is better than Concho Resources, this free list of high return, low debt companies is a great place to look.
Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.
M
The Foxhole
Oil routes are being dismantled one by one. The durable winner could be the North American energy left standing.
136
R
Rob_Curious
The durable premium you describe does not really exist for crude in a liquid market. This scenario, in almost a similar form, is happening thrice this year.
marcus_reid
Persistent volatility raises the hurdle rate on every long-lived energy investment, which suppresses the supply response that would eventually fix the problem. The instability is self-perpetuating in a way the price level is not.
Andrew LeggetMarket Insights
Are social media stocks the new Big Tobacco?
Greater regulatory scrutiny is catching up with digital platforms, posing a rising risk for social media stocks. But as Big Tobacco discovered, that's not always a bad outcome for shareholders.
14
Market Insights
Advertisement
Weekly Picks
CE
Ceazar on Sparc AI ·
When GPS fails: this small cap is fixing a $54B drone problem
Fair Value:CA$5.2541.1% undervalued
194 followersusers have followed this narrative
0 commentsusers have commented on this narrative
29 likesusers have liked this narrative
CO
composite32 on Archrock ·
AI Needs Power. Power Needs Gas. Gas Needs Compression: The Archrock Investment Thesis
Fair Value:US$44.8831.9% undervalued
4 followersusers have followed this narrative
0 commentsusers have commented on this narrative
1 likeusers have liked this narrative
JO
John_Eric on Advanced Energy Industries ·
AEIS Is Firing on Every Cylinder. My Problem Is the Safety Factor.
Fair Value:US$567.8655.9% undervalued
5 followersusers have followed this narrative
0 commentsusers have commented on this narrative
3 likesusers have liked this narrative
IS
isidrohg on Lam Research ·
The Memory Shortage Is Lam's Order Book — Whether It Persists Or Resolves
Fair Value:US$423.8536.1% undervalued
3 followersusers have followed this narrative
0 commentsusers have commented on this narrative
2 likesusers have liked this narrative
Recently Updated Narratives
CL
Clive_Thompson on Upside Gold ·
Upside Gold - New Technical Report Expected in Q1 2027 Could Re-Rate The Stock.
Fair Value:CA$1.552.7% undervalued
1 followerusers have followed this narrative
0 commentsusers have commented on this narrative
0 likesusers have liked this narrative
FR
FRAGMENTS on SITE Centers ·
SITE Centers Trades Around $2.90. It Had $238.9 Million of Cash. One $129.6 Million Decision Changes the Outcome.
Fair Value:US$3.313.3% undervalued
1 followerusers have followed this narrative
0 commentsusers have commented on this narrative
0 likesusers have liked this narrative
WA
waioa on UUE Holdings Berhad ·
UUE Holdings Expands Into High-Voltage Power Infrastructure Through Strategic JV
Fair Value:RM 1.559.7% undervalued
1 followerusers have followed this narrative
0 commentsusers have commented on this narrative
0 likesusers have liked this narrative
Popular Narratives
AN
AnalystConsensusTarget on NVIDIA ·
NVDA: Expanding AI Demand Will Drive Major Data Center Investments Through 2026
Fair Value:US$302.8329.9% undervalued
1450 followersusers have followed this narrative
8 commentsusers have commented on this narrative
35 likesusers have liked this narrative
AN
AnalystConsensusTarget on Alphabet ·
GOOGL: AI Platform Expansion And Cloud Demand Will Support Durable Performance Amid Competitive Pressures
Fair Value:US$427.8919.4% undervalued
1628 followersusers have followed this narrative
0 commentsusers have commented on this narrative
19 likesusers have liked this narrative
AN
AnalystConsensusTarget on Amazon.com ·
AMZN: Acceleration In Cloud And AI Will Drive Margin Expansion Ahead
Fair Value:US$32724.0% undervalued
1644 followersusers have followed this narrative
1 commentusers have commented on this narrative
16 likesusers have liked this narrative
Trending Discussion
AN
anthony_x0j2w on Platform Group SE KGaA ·
Hello,(I am a shareholder).I spent the summer investigating in whatever I was able to find in the press, the trustee, or legal, and comparing it to FS Benner's declaration/transcripts:press: MM has a tendancy to use facts, modify them and turn them the way they want: 100% of their claims against TPG0 is traçable factually, 80% is flawed and interpreted. Example are numerous: 11M loans banks to be paid seems right, but it has not been an issue at all, it has been paid in full. (and it happens all the time in every business...); the previous HR becoming a financial director in the article herself being attacked by TPG on the legal side; the wrong address of curator (if truly announced by TPG).Trustee: according to my research (which can be incomplete) no communication to the Nordic trustee (hereby, bond holders) has been done on a, indebtedness (late payment) > 1M€, which is their obligation by contract (clause 14.d - https://corporate.the-platform-group.com/bond/) => this is a sign of a huge lie and fraud, or the sign that there is no indebtedness > 1M€ over the whole TPG group.Legal: still awaiting for an answer, probable that I won't get it.VALUATIONYou can spent hours working the fundamentals, if they're flawed...the thesis falls.Anyway, I always substracts the badwill (that I consider non-current - you have it in the CFS) & non-controlling interests from my valuation:Earnings ~22MFCF ~40M€The financial statements are not the issue here, we are more on an cheap option on the sincerity of the accounts that a real valuation. Unfortunately, these are unverifiable elements, hence the low price./!\ Careful:the accounts are consolidated and skip the subsidiaries issues...Careful with the business model: TPG0 is a financial holding that acquire subsidiaries, hold the debt, and has no operations. 100% of the Cash Flow comes from subs' dividends => it is a risk here, more a plumber risk than an operational one, but nevertheless...The auditor is too small, and managed by the same firm than before, with 140K€/year commission => it's too low, nobody external really reviewed what Benner and his team are doing internallycapital increase do not go through the CFS, but through change in equity AND equity in the BSIf the equity stays low too long, the WACC increase will be unbearable (I have a 30% global, with a 118% on equity): diluting is expensive => TPG machine can stay broken for a while.Most of the people I talk with never saw this, while this is ESSENTIAL to Benner's business model.SEVERAL EVENTS THAT COULD CHANGE:AEP is being audited by KPMG: if Benner plays the "we will propose KPMG to our shareholders BEOY", this can increase the trust in him significantly/KPMG (or other) to validate the 2026 IFRS accounts & having a word on HGB's: though still consolidated, at least we'll know...AEP being eventually acquired: while it carries a high integration risk due to its size, they talked about it so many times, that trust goes with it.Without this combination of event, the equity is doomed to stay at this level, IMO.Do not forget to also follow the bond: with TPG's announced safe harbor plan for buyback (25% of daily exchange), it is also interesting to check this illiquid and retail market: https://live.deutsche-boerse.com/bond/no0013256834-the-platform-group-ag-8-875-24-28?mic=XFRA
1
|0
CO
Constantin_Mar on Platform Group SE KGaA ·
Quite a lot of speculation presented as if it were evidence.You are combining alleged payment disputes, alleged bank actions, legal disputes with journalists and other unverified claims to imply that TPG’s financial reporting is somehow unreliable or that the company is approaching insolvency. That’s a very serious conclusion, but the evidence you’ve presented doesn’t establish it.TPG’s financial statements, share count, debt, cash flow and acquisitions can all be checked against official filings and corporate documents. That’s called due diligence. Repeating allegations and then pointing to a low P/E doesn’t prove anything.In fact, the P/E below 1 is precisely the reason the underlying numbers need to be investigated rather than dismissed. If you have documentary evidence that TPG’s reported figures are false, that banks actually cancelled the alleged facilities, or that the company is insolvent, publish the documents and numbers.Otherwise, this reads less like analysis and more like an attempt to create fear and selling pressure around a micro-cap stock.Claims require evidence. Allegations are not evidence.
1
|1
